The Latest on Tax Reform by zgo16864

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									          The Latest on Tax Reform




Kent Olson
Budget Officer
City of Jacksonville
November 20, 2008

                                     1
         Issues to Discuss:
• Review of Impact of Amendment One
• Rules for FY2010 and Beyond
• Possible Changes to the Forms
• Maximum Millage Choices Illustrated
• Compliance Issues
• “Wait till Next Year”


                                        2
              Amendment One
• Additional $25,000 homestead exemption above
  just value of $50,000
• $25,000 exemption for tangible personal property
• Portability of Save Our Homes
• 10% cap on non-homesteaded properties (begins
  in 2010, sunsets in 2018, but new vote is required
  by 2018)
• Assistance for fiscally constrained counties ($10
  million for FY09)
• Schools impacted only for TPP and portability

                                                       3
       Portability Mechanics
• State-wide application
• Up to $500,000 in value can be transferred
• If new home has a lower just value, can
  transfer a proportional benefit
• Portability must be applied for (similar to
  homestead exemption)
• Many counties have not seen all eligible
  apply for portability


                                            4
    Rules for FY10 and Beyond

• Rolled-back rate (RBR) definition has not
  changed
• Per capita personal income added to RBR
  only for maximum levy limit calculation
  purposes
• Levy limits – majority, 2/3, unanimous




                                              5
      Rules for FY10 (cont.)
• Super-majority vote is of the membership
  of the governing body, not the members
  who are present
• Language back to “may” from “must” to
  reduce taxes if greater than percentage
  changes in 200.065(6) (if final changes are
  greater than 1% for cities, counties,
  schools and water management districts
  or 3% for all other taxing authorities)
  (same as FY09)
                                            6
  Maximum Levy Limits – FY10
• Majority vote – Rolled-back rate(RBR),
plus per capita personal income change
• Two-thirds vote – 110% of RBR
adjusted for per capita personal income
• Unanimous vote (¾ if 9 or more) – up
to 10 Mil Cap
• Referendum – up to 10 Mil Cap


                                           7
         Forms and Revisions
•Minimal, if any, changes likely for FY10:
   • DR420
   • DR420TIF – only if you have tax increment financing
   districts in your jurisdiction
   •DR487 V – Governing Body Vote Record
   •DR422 – Revise Millage if Permitted
   •DR420 VMA – Voted Millage Addendum (if necessary)
•Some changes expected for FY10:
   • DR420 MM-P – Preliminary Maximum Millage
   • DR420 MM – Final Maximum Millage


                                                           8
  “To Bust the Cap or Not to Bust
      – That is the Question”
• Overriding the majority vote maximum
resets the base at which RBR is calculated
• RBR plus adjustment for per capita
personal income is maximum levy by
majority vote (same as FY09)
• RBR definition has not changed for
purposes of advertising for a tax increase
(same as FY09)

                                             9
              Caveat Civis!

• Legislature will reconvene in January

• Changes can still be made for FY10




                                          10
             Levy Capacity
• Levying less than Majority Vote provides
  additional future capacity – not “use it or
  lose it”

• Maximum majority vote rate in following
  year is based upon the RBR using the
  prior year maximum rate


                                                11
      Levy Capacity Example
• Prior Year Millage Rate: 5.5687
• Prior Year Maximum Rate: 5.6872
• While RBR will be calculated starting with
  the 5.5687 millage, the Maximum that can
  be levied by majority vote will begin with
  the “maximum millage” RBR based upon
  the 5.6872
• Levying less than the maximum rate will
  create future capacity for the majority vote
  maximum
                                             12
A Tale of Two Cities




                       13
            City of Utopia Gardens – DR420TIF
Possible Revised Form of 11-20-08                                          Utopia Gardens
Fiscal Year 2010 (Tax Levy Year 2009)                                               CRA
                                                                                District 1
DR-420 TIF's:
1. Current Year taxable value in the tax increment area                      237,562,148
2. Base Year taxable value in the increment area                             108,632,545
3. Current year tax increment value (line 1 minus line 2)                    128,929,603
4. Prior year taxable value                                                  222,188,023
5. Prior year tax increment value (line 4 minus line 2)                       113,555,478
6. a. Enter proportion on which the payment is based                              95.00%
6. b. Dedicated Increment Value (6a) x (3)                                   122,483,123
6. c. Amount of Payment to Redevelopment Trust in prior year                    $836,743
7. If amount to be paid to Trust is not based on a proportion of the tax
     increment value
7 a. Amount of Payment to Redevelopment Trust Last Yr
7 b. Prior Year Operating Millage Levy (Form DR420, line 10)
7 c. Taxes Levied on Prior (multiply line 5 by 7b, divide by 1000)
7 d. Previous Yr Payment as Prop of Taxes Levied (7a/7c)
7 e. Dedicated Increment Value (7d) x (1)

                                                                                      14
    City of Utopia Gardens – DR420, p. 1
                                                            Utopia
Possible Revised Form of 11-20-08                           Gardens
Fiscal Year 2010 (Tax Levy Year 2009)                      DR-420:
1. Curr. Yr. Tax Value- Real Property                    1,238,640,314
2. Curr. Yr. Tax Value - Personal Property                 42,155,231
3. Curr. Yr. Tax Value - Centrally Assessed Property       13,260,287
4. Curr. Yr. Gross Taxable - Oper. Purposes              1,294,055,832
5. Curr. Yr. Net New Taxable Value                         12,268,759
6. Curr. Yr. Adjusted Taxable Value                      1,281,787,073
7. Prior Yr. Final Gross Taxable Value                   1,257,978,930
8. Number of Tax Increment Value sheets                                1
9. Does the taxing authority levy a voted debt service
   or millage voted for 2 yrs?                                       No
                                                                  15
     City of Utopia Gardens – DR420, p. 2
10. Prior Yr. Operating Millage Levy                                     7.7564
11. Prior Yr. Ad Valorem Proceeds (7) x (11)                          9,757,388
12. Amount, if any, paid or applied line (6c) or (7a) for all
   DR420 TIF forms                                                      836,743
13. Adjusted Prior Year Ad Valorem Proceeds (line 11 - line
   12)                                                                8,920,645
14. Dedicated Increment Value (sum of 6b or 7e for all DR420
   TIF forms)                                                       122,483,123
15. Adjusted Current Year Taxable Value (line 6 - line 14)         1,159,303,951
16. Current Year Rolled-Back Rate (13 divided by 15) x 1,000             7.6948
17. Curr. Yr. Proposed Oper. Millage Rate                                7.6948
18. Total taxes at proposed millage rate (17 x 4; div. by 1,000)      9,957,501
19. Check Type of Principal Authority                                       City
20. Check Type Taxing Authority                                         Principal
21. Is millage levied in more than one county?                               No
                                                                            16
    City of Utopia Gardens – DR420, p. 3
Dependent Special Districts and MSTUs Stop and Sign
22. Total Adj. Prior Yr Proceeds of authority, DSDs
   &MSTUs(Line 13 From DR420s)                              8,920,645
23. Curr. Yr. Agg. Rolled Back Rate (line 22 div. by line
   15, mult. by 1,000)                                        7.6948
24. Curr. Yr. Ag. Rolled Back Taxes (line 4 x line 23)      9,957,501
25. Total Oper. Ad Valorem Taxes (line 18 from all
   DR420's)                                                 9,957,501
26. Curr. Yr. Prop. Ag. Millage Rate (line 25 divided by
   line 4)                                                    7.6948
27. Curr. Yr. Proposed Rate - % Chg. Rolled (line 26
   divided by line 23) -1 x100                                 0.00%



                                                                 17
    City of Utopia Gardens – DR420MM-P, p. 1
Possible Revised Form of 11-20-08                                                  DR-420 MM-P:
Fiscal Year 2010 (Tax Levy Year 2009)                                              Utopia Gardens
1. Has your taxing authority levied ad valorem for < 5 yrs?                                    No
2. Current Yr. gross taxable value from Form DR420, line 4                           1,294,055,832
3. Current Year rolled-back rate from Form DR420, line 16                                  7.6948
4. In 2008, did you levy majority vote limit but had one member adopt higher
     rate?                                                                                     No
5. Prior Year operating millage levy from Form DR420, line 10                              7.7564
6. Prior Year majority vote maximum rate from 2008 Form DR420MM, line 24                   7.9471

If line 5 is equal to or greater than line 6, go to line 13
7. Prior year gross taxable value from Form DR420, line 7                            1,257,978,930
8. Prior year ad val. proceeds with majority vote maximum (6 x 7 div. by 1,000)          9,997,238
9. Amount paid or applied in a prior year to a ded. inc. value (Form DR420, line
    12)                                                                                   836,743
10. Adj. prior year ad val. proceeds with majority vote (line 8 minus line 9)            9,160,495
11. Adjusted current year taxable value from Form DR420, line 15                     1,159,303,951
12. Adjusted current year rolled-back rate (line 10 divided by line 11 x 1000)             7.9017


                                                                                              18
   City of Utopia Gardens – DR420MM-P, p. 2
Calculate maximum millage levy for 2009
13. Maximum millage rolled-back rate to be used (line
   12, if calculated, or line 3)                                7.9017
14. Adjustment for growth in per capita Florida personal
   income                                                       1.0250
15. Majority vote max. millage rate allowed (line 13 x line
   14)                                                          8.0992
16. Two-thirds vote maximum millage rate allowed (line
   15 x 1.10)                                                   8.9091
17. Current year proposed millage rate - from Form
   DR420, line 17                                               7.6948
18. Current year proposed taxes (line 17 x line 2 div. by
   1000)                                                      9,957,501
19. Minimum vote required to levy proposed millage
   (check one)                                                 majority
                                                                     19
  City of Utopia Gardens – DR420MM-P, p. 3
20. The selection on line 19 allows a maximum millage
   rate of: (enter appropriate rate)                              8.0992
21. Total taxes levied at the proposed maximum millage
   rate (line 20 x line 2 div. by 1000)                        10,480,817
22. Current year proposed taxes of all dependent special
   districts & MSTUs (sum of DR420MM-P, 18)                               0

23. Total current year proposed taxes (line 18 plus line 22)    9,957,501
24. Taxes at the proposed max. millage of all dependent
   special districts & MSTUs                                              0
  (the sum of all lines 21 from each district's Form
  DR420 MM-P)
25. Total taxes at proposed maximum millage (line 21 plus
   line 24)                                               10,480,817
26. Are taxes on line 23 = or < taxes on line 25?                    Yes
                                                                     20
            City of Dry Hole – DR420TIF
Possible Revised Form of 11-20-08                                       Dry Hole
Fiscal Year 2010 (Tax Levy Year 2009)                                       CRA
DR-420 TIF's:                                                           District 1
1. Current Year taxable value in the tax increment area              237,562,148
2. Base Year taxable value in the increment area                     108,632,545
3. Current year tax increment value (line 1 minus line 2)            128,929,603
4. Prior year taxable value                                          222,188,023
5. Prior year tax increment value (line 4 minus line 2)              113,555,478
6. a. Enter proportion on which the payment is based                     95.00%
6. b. Dedicated Increment Value (6a) x (3)                           122,483,123
6. c. Amount of Payment to Redevelopment Trust in prior year           $963,909
7. If amount to be paid to Trust is not based on a proportion
of the tax increment value
7 a. Amount of Payment to Redevelopment Trust Last Yr
7 b. Prior Year Operating Millage Levy (Form DR420, line 10)
7 c. Taxes Levied on Prior (multiply line 5 by 7b, divide by 1000)
7 d. Previous Yr Payment as Prop of Taxes Levied (7a/7c)
7 e. Dedicated Increment Value (7d) x (1)
                                                                            21
        City of Dry Hole – DR420, p. 1
Possible Revised Form of 11-20-08                            Dry Hole
Fiscal Year 2010 (Tax Levy Year 2009)                        DR-420:

1. Curr. Yr. Tax Value- Real Property                       1,238,640,314

2. Curr. Yr. Tax Value - Personal Property                    42,155,231

3. Curr. Yr. Tax Value - Centrally Assessed Property          13,260,287

4. Curr. Yr. Gross Taxable - Oper. Purposes                 1,294,055,832

5. Curr. Yr. Net New Taxable Value                            12,268,759

6. Curr. Yr. Adjusted Taxable Value                         1,281,787,073

7. Prior Yr. Final Gross Taxable Value                      1,257,978,930

8. Number of Tax Increment Value sheets                                      1
9. Does the taxing authority levy a voted debt service or
    millage voted for 2 yrs?                                            No
                                                                        22
        City of Dry Hole – DR420, p. 2
10. Prior Yr. Operating Millage Levy                                     8.9352
11. Prior Yr. Ad Valorem Proceeds (7) x (11)                         11,240,293
12. Amount, if any, paid or applied line (6c) or (7a) for all
   DR420 TIF forms                                                      963,909
13. Adjusted Prior Year Ad Valorem Proceeds (line 11 - line
   12)                                                               10,276,384
14. Dedicated Increment Value (sum of 6b or 7e for all DR420
   TIF forms)                                                       122,483,123
15. Adjusted Current Year Taxable Value (line 6 - line 14)         1,159,303,951
16. Current Year Rolled-Back Rate (13 divided by 15) x 1,000             8.8643
17. Curr. Yr. Proposed Oper. Millage Rate                                9.0859
18. Total taxes at proposed millage rate (17 x 4; div. by 1,000)     11,757,662
19. Check Type of Principal Authority                                       City
20. Check Type Taxing Authority                                        Principal
21. Is millage levied in more than one county?                               No
                                                                            23
        City of Dry Hole – DR420, p. 3

Dependent Special Districts and MSTUs Stop and Sign
22. Total Adj. Prior Yr Proceeds of authority, DSDs
   &MSTUs(Line 13 From DR420s)                              10,276,384
23. Curr. Yr. Agg. Rolled Back Rate (line 22 div. by line
   15, mult. by 1,000)                                         8.8643
24. Curr. Yr. Ag. Rolled Back Taxes (line 4 x line 23)      11,470,899
25. Total Oper. Ad Valorem Taxes (line 18 from all
   DR420's)                                                 11,757,662
26. Curr. Yr. Prop. Ag. Millage Rate (line 25 divided by
   line 4)                                                     9.0859
27. Curr. Yr. Proposed Rate - % Chg. Rolled (line 26
   divided by line 23) -1 x100                                  2.50%

                                                                  24
            City of Dry Hole – DR420MM-P, p. 1

Possible Revised Form of 11-20-08                                                      DR-420 MM-P:
Fiscal Year 2010 (Tax Levy Year 2009)                                                      Dry Hole
1. Has your taxing authority levied ad valorem for < 5 yrs?                                      No
2. Curr. Yr. gross taxable value from Form DR420, line 4                               1,294,055,832
3. Current Year rolled-back rate from Form DR420, line 16                                    8.8643
4. In 2008, did you levy majority vote limit but had one member adopt higher rate?               No
5. Prior Year operating millage levy from Form DR420, line 10                                8.9352
6. Prior Year majority vote maximum rate from 2008 Form DR420MM, line 24                     7.9471
If line 5 is equal to or greater than line 6, go to line 13
7. Prior year gross taxable value from Form DR420, line 7                                       N/A
8. Prior year ad val. proceeds with majority vote maximum (6 x 7 div. by 1,000)                 N/A
9. Amount paid or applied in a prior year to a ded. inc. value (Form DR420, line 12)            N/A
10. Adj. prior year ad val. proceeds with majority vote (line 8 minus line 9)                   N/A
11. Adjusted current year taxable value from Form DR420, line 15                                N/A
12. Adjusted current year rolled-back rate (line 10 divided by line 11 x 1000)                  N/A


                                                                                               25
        City of Dry Hole – DR420MM-P, p. 2

Calculate maximum millage levy for 2009
13. Maximum millage rolled-back rate to be used (line 12,
   if calculated, or line 3)                                     8.8643
14. Adjustment for growth in per capita Florida personal
   income                                                        1.0250
15. Majority vote max. millage rate allowed (line 13 x line
   14)                                                           9.0859
16. Two-thirds vote maximum millage rate allowed (line 15
   x 1.10)                                                       9.9945
17. Current year proposed millage rate - from Form
   DR420, line 17                                                9.0859
18. Current year proposed taxes (line 17 x line 2 div. by
   1000)                                                      11,757,662
19. Minimum vote required to levy proposed millage
   (check one)                                                  majority
                                                                    26
        City of Dry Hole – DR420MM-P, p. 3
20. The selection on line 19 allows a maximum millage
   rate of: (enter appropriate rate)                            9.0859
21. Total taxes levied at the proposed maximum millage
   rate (line 20 x line 2 div. by 1000)                     11,757,662
22. Current year proposed taxes of all dependent special
   districts & MSTUs (sum of DR420MM-P, 18)                             0

23. Total current year proposed taxes (line 18 plus line 22) 11,757,662
24. Taxes at the proposed max. millage of all dependent
   special districts & MSTUs                                            0
  (the sum of all lines 21 from each district's Form
  DR420 MM-P)
25. Total taxes at proposed maximum millage (line 21 plus
   line 24)                                                 11,757,662
26. Are taxes on line 23 = or < taxes on line 25?                  Yes
                                                                   27
Maximum Millage Illustration




                               28
             Revenue Caps
• Similar to TABOR caps in Colorado
• Would limit revenue growth to increases in
  population and inflation; extra monies collected
  would be rebated
• Fell apart in Taxation & Budget Reform
  Commission over what to include and exclude
• Current proposal doesn’t have exclusions
• Supported by National Federation of
  Independent Businesses (NFIB) and Americans
  for Prosperity
• Hope to put in the ballot for November 2010

                                                 29
           Non-Compliance
• If Dept of Revenue review indicates non-
  compliance with maximum rates
  – Determination within 30 days of submittal
    deadline (30 days after adoption)
  – Repeat hearing and advertisement process
  – Notice includes “Previous Notice . . In
    Violation of the Law”
  – Revised millage adopted recertified with State
    within 15 days of adoption; not sent to PA or
    TC
                                                 30
     Non-Compliance Notice
          Language
• THE PREVIOUS NOTICE PLACED BY
  THE (name of taxing authority) HAS
  BEEN DETERMINED BY THE
  DEPARTMENT OF REVENUE TO BE IN
  VIOLATION OF THE LAW,
  NECESSITATING THIS SECOND
  NOTICE.


                                       31
     Non-Compliance (cont.)
• If Dept of Revenue determines non-
  compliance is remedied & recertified, no
  penalty
• If compliance is not recertified, penalty
• If non-compliance is not remedied, penalty
• Penalty: 12 months of sales tax revenues
• Does not apply to independent special
  districts

                                           32
   Non-Compliance Corrected
• If excess taxes are collected, held by tax
  collector in trust

• Excess may only be used to reduce taxes
  in subsequent fiscal year




                                               33
“Do we look familiar?”




                         34
     “Danger, Will Robinson”
• Taxpayer Anger is Still High

• Limitation Plans on the Horizon
  – Property tax limitations
  – Revenue Caps




                                    35
      Property Tax Limitations
• 1.35% limitation on property taxes
  – Had garnered 10% of the required signatures
    this June
  – Former Speaker Rubio has lent support to effort
  – Much like Proposition 13, covers all jurisdictions
  – 13.5 mills for the entire tax bill
  – excludes G.O. debt and two year voted millage
  – Aiming to put on November 2010 ballot
  – Support is mainly in South Florida

                                                    36
      Property Tax Limitations, p. 2
• Groups supporting 1.35% include:
  – Fair Property Taxes for All, Inc. (South Florida)
       • (Citizens Coalition of South Florida)
  –   Cut Property Taxes Now, Inc. (Tampa)
  –   Bay Tax Foundation (Bay County)
  –   Floridians for Tax Reform (Tallahassee)
  –   Coalition Against Runaway Taxes (CART) (Holmes
      Beach – Anna Maria Island, Manatee County)
  –   Cut Taxes Now (St. Petersburg)
  –   Ax the Tax (Orlando)
  –   United Seniors of America Foundation (Miami)
  –   Citizens United for Sensible Planning (Palm Beach)
                                                           37
             Revenue Caps
• Similar to TABOR caps in Colorado
• Would limit revenue growth to increases in
  population and inflation; extra monies collected
  would be rebated
• Fell apart in Taxation & Budget Reform
  Commission over what revenues to include and
  exclude
• Current proposal doesn’t have exclusions
• Cap could be exceeded only by voter approval
• Supported by National Federation of
  Independent Businesses (NFIB), Florida
  Taxpayers Union and Americans for Prosperity
• Hope to put on the ballot for November 2010
                                                     38
            Factors to Watch
•   “It’s the Economy, Stupid!”
•    Real Estate market in South Florida
•    Property Tax Rates Just Adopted
•    Legislative Session Tone
•    Local Government Spending Restraint




                                           39
        Additional Resources
• Rules for FY2010 and after – 200.065(5)
• Online Sunshine (www.state.leg.fl.us)
• DOR(http://dor.myflorida.com/dor/property/
  maxmillage.html)
• FGFOA website




                                           40

								
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